Domestic automakers continue to lose market share

Chinese automakers have seen an extended market share slump in comparison to foreign brands, despite continuous expansion in the world's largest auto market during the first half of the year.

Auto production and sales reached new highs during the January-June period, hitting 10.75 million and 10.78 million units, respectively, data from the China Association of Automobile Manufacturers showed.

But domestic brands have seen their market share shrink due to rising competition from foreign brands and tightened vehicle ownership regulations that are designed to reduce gridlock.

With some 3.57 million cars sold during the first half, Chinese passenger vehicles accounted for 41.2 percent of total passenger vehicle sales in the same period.

"It's harder to push sales now than it was in 2009," said Yang Wei, an auto dealer in Hefei, capital of east China's Anhui Province.

Yang added that dealers who focus on selling domestic vehicles are facing strong inventory pressure.

Chinese auto brands experienced a sales boom in 2009 after the government rolled out incentives and subsidies to help domestic companies weather the global financial crisis.

The policies ended in 2010, leaving the companies to fend for themselves. Sales of passenger vehicles have slipped ever since. Chinese automakers have largely focused on low-end vehicles to fuel their expansion, as the high-end demographic is dominated by foreign vehicles manufactured and sold through joint ventures with Chinese auto firms.

Domestic automakers have focused too much on expanding their market share while ignoring growth-related problems, according to Hu Wenzhou, an auto industry analyst at Bank of China International (China) Limited.

"Domestic players have prioritized production increases and the launch of new models while overlooking quality and service," he said.

Technology, branding, after-sale service and innovation are the key factors that will shape the development of China's automakers, said Liang Huaping, president of the Anhui Association of Automobile Manufacturers.